Tax Tip: Manufacturing Innovations and R&D Tax Incentives

Tax tip: (Did you know?) These manufacturing innovations may be eligible for R&D Tax Incentives:

Developing Second-Generation or Improved Products

Developing Innovative Manufacturing Equipment

Tooling and equipment fixture design and development

Prototyping and three-dimensional solid modeling

And many many more.

The Research & Development tax credit is the largest tax credit provided to business by the federal government at approximately $12 billion a year. Many businesses think that they or their industry do not qualify. Or, they think that only the larger manufacturers qualify. However, there are many cases a secondary smaller manufacturer of parts manufacturer may qualify. The R&D tax credit encourages and rewards manufacturers who are bringing new or improved products to the marketplace. The credit is designed to reimburse manufacturers who develop new products or inventions and offers a significant percentage back to the company for Qualified Research Activities and Qualified Research Expenses.

Additionally, R&D Tax regulations allow eligible taxpayers to “look back” to all open tax years (typically three years plus the current year) for potential research credits that were never claimed.

Given the significant funds available in the form of R&D Tax Credits, it is worth exploring if your business qualifies. We’ll help understand your business and the regulations to see if your process or product improvements qualify.

Ron Leger is a Massachusetts based CPA who specializes in the R&D Tax credit and taxes for businesses, individuals, trusts and tax exempt organizations. Contact us today!